Also, Prior Counsel Entitled to Receive $25,000 Holdback Based on His Attorney’s Lien.
Henry Shain Professional Corp. v. Bergeron, Case No. A131328 (1st Dist., Div. 5 Mar. 20, 2012) (unpublished) is an interesting case illustrating how two attorneys--prior and successor counsels--did things right as far as perfecting attorney’s liens or drafting retainer agreement to protect their interests.
Client was unhappy that $25,000 was held back for prior counsel based on an attorney’s lien. On appeal, the court sustained the holdback, recognizing the utility of an attorney’s lien to secure payment for services even after an attorney is discharged. (Siciliano v. Fireman’s Fund Ins. Co., 62 Cal.App.3d 745, 752 (1976).)
However, a lower court had ordered successor law firm to disgorge a little over $118,000 from a $160,000 contingency fee it collected based on failure to account for the prior attorney lien in the terms of successor counsel’s retention agreement. That disgorgement was reversed on appeal because nothing demonstrated that successor counsel knew about the prior counsel’s lien such that contingency retainer agreement was not voidable under Business and Professions Code section 6147--the contingency fee arrangement requirements--for not revealing how disbursements and costs incurred in connection with a settlement of a claim (such as an attorney’s lien) would affect the contingency fee. Given no knowledge of the fee, there was nothing to disclose under section 6147, requiring an overturn of the disgorgement order. “Neither the court nor [client] provides authority for the proposition that after learning of the existence of the [prior] attorney fee lien, [successor counsel] had a duty to modify [successor counsel’s] fee agreement in order to enforce it, and we have found no such authority.” (Slip Opn., p. 15.)
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